The Chinese government will soon act to support the local sugar industry which has been affected by weak prices, a senior official with the state-run economic planner was quoted as saying on Thursday. Benchmark sugar futures on the Zhengzhou Commodity Exchange have fallen nearly 25 percent since hitting their highest level so far this year in mid-April, weighed down by lower consumption and large stockpiles held by private firms.

Traders estimate industrial stocks at 2 million tonnes now. "If the prices fall too much, it will have a negative impact on production and sales in the next crushing season and hurt farmers' interests," said Liu Xiaonan, an official with the state-run economic planner, the National Development and Reform Commission.

"The government will take action to boost the development of the industry, with expectations that the new measures to be launched soon," Liu said, without elaborating. He was quoted by the industry website Guangxi Sugar (www.gsmn.com.cn) Last week, Chinese sugar futures traded almost limit-up, fuelled by talk that the government may purchase 500,000 tonnes of sugar. Liu predicted prices will fall further as demand is likely to remain weak as China's manufacturing growth slows. On Thursday, sugar futures were trading between 5,274 yuan ($830) and 5,379 yuan ($850) a tonne, slightly higher than in the previous session.

source: brecorder

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